Dollar Remains In A Quiet Range In Asian Trading

Europea Morning Update

Releases from Australia:

Building developers will be looking over their shoulders from now on in Australia after the dramatic -5.7% plunge in approvals over March that brought the YOY figure into negative territory at -0.7%. With mortgage rates having soared by 1.3% since August Australians appear to be throwing in the towel. The next question over the coming months may well be whether Australian property prices will follow the States and U.K. which will cause a sharply lower growth rate but with high inflation.

While manufacturing did see a mild upturn in March it is still suffering from higher interest rates, input costs and slowing global demand. Still the AiG index remains above the boom/bust 50 level which still suggests expansion but there still isn't much confidence that it will remain there.

Releases from Japan:

Japanese wage earnings came in smack on target though saw an easing from February's 1.5% level. Interestingly however average overtime pay saw its largest jump since December 2004, gaining by 4.1% YoY. However, there have been revisions to promote hiring of permanent employees which is though to have caused this higher than expected rise.

The following economic releases are due today:

March

U.S. Personal Income (MoM) +0.4%
U.S. Personal Spending (MoM) +0.2%
U.S. PCE Core (MoM) +0.1%
U.S. PCE Core (YoY) +2.0%
U.S. Construction Spending (MoM) - 0.6%

April

Japan Vehicle Sales (YoY)
U.K. Manufacturing PMI 50.8
U.S. Challenger Jobs Cuts (YoY)
U.S. Initial Jobless Claims (26th) 360K
U.S. Continuing Claims (19th)
U.S. ISM Manufacturing 48.0

It was almost an anti-climax yesterday. The figures promised much but the market has ended up no more aware of what to do than before. My first impression having looked across the currency pairs is that there is actually more upside Dollar risk than downside. The implication is actually for new highs to be made and tentatively this should imply a drop through the 1.5510 Euro low and more down towards the 1.5340 low.

Having said that, the initial reaction still appears to be for the current correction to extend just a little further with break levels to my preferred scenario being quite close.

This should cause retests of 1.5702-33 Euro, 1.0284-98 Swissie and 2.0025 Pound. The Yen has basically the same scenario but has two potential alternatives for the correction, the first moving back to 103.19 and the other a deeper move to 102.44.

Once again Euro-Yen could well provide the clue here. While the pullback yesterday was higher than I had anticipated I still find the bullish scenario very difficult to fit into the larger picture. In fact the downside looks more and more likely to reach the 160.20 area.

Needless to say the catalyst to watch for is probably the U.S. Manufacturing ISM while tomorrow's non-farm payrolls may also provide some impact also.

Note important support and resistance areas:

Ian Copsey
Global Forex Trading
http://www.gftforex.com

DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.